In order to determine the taxable supplies that entitle them to input tax credits (ITCs) and input tax refunds (ITRs), financial institutions must divide the property and services acquired into three input categories:

• property purchased for use as capital property (excluded input)
• property or services acquired only for the purpose of making supplies of taxable or exempt property or services (exclusive inputs)
• property or services acquired for the purpose of making both taxable and exempt supplies (residual inputs)

Financial institutions must follow certain rules when determining the ITC and ITR amounts they may claim regarding their inputs.

In the case of residual inputs, special rules apply to financial institutions that are qualifying financial institutions.